Reference no: EM132593731

Bumblebee Company estimates that 300,000 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs  Variable Overhead Costs

Supervision $ 96,000

Indirect labor $126,000

Depreciation 72,000

Indirect materials 90,000

Insurance 30,000

Repairs 69,000

Rent 24,000

Utilities 72,000

Property taxes 18,000

Lubricants 18,000

$240,000

$375,000

• It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours.

During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: supervision $8,000, depreciation $6,000, insurance $2,460, rent $2,000, and property taxes $1,500.

Variable overhead costs: indirect labor $12,432, indirect materials $7,680, repairs $6,100, utilities $6,840, and lubricants $1,920.

Instructions:

Question a. Prepare monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2020.

Question b. Prepare flexible budget report for October.

Question c. Comment on management's efficiency in controlling manufacturing overhead costs in October.